SongADAO

Authors quag (Core @ NFTX, proud owner of many SADs)

Summary This proposal suggests using a small portion of DAO Treasury funds to purchase a fixed amount of SAD songs and pair them with the corresponding ETH in an NFTX vault.

Motivation Song-A-DAO provides ‘Protocol Owned Liquidity’ (POL) of their NFTs with a permanently liquid price floor; giving total confidence to participants that they can instantly buy, sell, and swap their songs. The DAO acts as a buyer of last (or first!) resort while capturing the fees of this activity. The benefits of this approach are starting to become more obvious and The Purrnelope’s Country Club project seeded an NFTX vault as part of their roadmap. Having a liquid $SONG token opens up opportunities throughout DeFi as we are slowly beginning to see the possibilities of backed NFTs (such as borrowing against PUNK on Rari) in the landscape.

The biggest potential downsides I can see are impermanent loss and missing royalties. The former can be mitigated by utilising NFTX’s ‘single side staking’, where you can earn fees by staking only the NFT and not pairing with ETH. The latter I believe would at least partially (and maybe more) be accounted for in the form of vault fees from the buy, sell, and swap activity in the vault.

Proposal Clear a budget to purchase ~80 SAD NFTs (~2% supply) Pair 50 with the corresponding ETH to supply liquidity in NFTX vault Stake the remaining 30 to provide additional inventory and offset impermanent loss.

Opportunity Song owners can swap, buy, and sell instantly Composable $SONG ERC-20 token that is backed by the NFTs Song owners could stake their $SONG to earn yield Continues to show participation in web3 space The DAO becomes the primary fee capturer of fungible SAD activity (POL)

Team & Resources @quag would take the lead on this: Based on today’s (Feb 9, 2022) price, a sweep of 80 SADs using gem.xyz would be 9.37 ETH.

The floor price would be temporarily raised from 0.06 to 0.17 so a decision would need to be made on what the price should be set at when seeding the vault. (To try and prop up the new 0.15 floor or market make back at the old floor.) Or split the difference. Somewhere around 0.1 would seem reasonable? 50 @ 0.1 would require 5 ETH as liquidity.

Yes vote would cost: Gem sweep: 10 ETH NFTX Vault setup: 0.5-1 ETH (NFTX vault setup costs ) Pool liquidity: 5 ETH (more/less depending on price chosen) Misc gas: 0.5 ETH

Total required: ~16 ETH

No vote means: We’d spend no money and not set up a vault.